Time Warner net income slips

Revenue rises 5 percent, but profit falls with establishment of legal reserve. Also, company will restate results for AOL Europe.

Reuters

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Dec. 3, 2004 8:00 a.m. PT

Time Warner, the world's largest media company, said Wednesday that third-quarter profit fell as it established a $500 million legal reserve and that it will restate results for its AOL Europe unit prior to 2002.

The owner of America Online, HBO and Warner Bros. said net income fell to $499 million, or 11 cents a share, from $541 million, or 12 cents a share, a year earlier.

Third-quarter earnings include income from discontinued operations of 1 cent a share and include one-time charges totaling 5 cents a share. The year-ago quarter included a one-time gain of 1 cent a share.

Revenue rose 5 percent to $9.96 billion from $9.5 billion in the year-earlier period.

Wall Street expected earnings of 14 cents a share and revenue of $9.84 billion, according to Reuters Estimates.

As a result of issues with AOL Europe, Time Warner also said it will restate financial results for 2000 and 2001 and said its results for 2002 may also be affected.

The company, which acquired 80 percent of AOL Europe in January 2002, said it will change the way it accounted for the deal. Previously it accounted for the deal using the equity method of accounting. It now says it should have been consolidated starting in March 2000.

Time Warner said its decision to change the way it accounted for the results of AOL Europe reflects its discussions with the U.S. Securities and Exchange Commission.